Russia hops on to the cryptocurrency bandwagon

20 October, 2017

Speculatuon street was for quite some time now doing rounds with reports of Russia planning to launch its own cryptocurrency called the CryptoRuble. The latest leaks and reports confirm these earlier speculations on the world's largest country taking on this new and highly evolving technology.

Unlike the other major cryptocurrencies at play in the world such as Bitcoin and Ethereum, the CryptoRuble is highly unlikely to enjoy the same extremely decentralised framework in popular usage.

Journalists all over the world have tried to contact the Kremlin regarding the legitimacy of these reports. The legitimacy is being put up as the first reports of the said announcement were published in the CoinTelegraph which in-turn derived its citation from a local Russian daily, which cites the Russian government's minister of communications, Nikolay Nikiforov.

The decision to create its own sovereign crypto currency was apparently decided by the Kremlin after it publicly took a hard stance against the other coins and denounced their legitimacy as a replacement for the Ruble.

As with everything Russian, news related to the CryptoRuble too is extremely scarce. There, however, are leaks which suggest that the CryptoRuble is to be a coin which will not have any mining capabilities, i.e., it won't be possible for dataminers world over to mine the CryptoRuble.

The coins are supposedly to be released and tracked by a government agency just like normal paper currency. This leads to a major conflict in the working ideology of cryptocurrencies of ridding global commerce from government managed fiat currencies.

Drawing upon some strengths of crypto, CryptoRuble is too based on the evolving blockchain technology. This does give some credibility to the sovereign coin along with a veneer of decentralisation which would assist in the prevention of cases of online fraud.

Reports suggest that both, the Ruble as well as CryptoRuble, would be traded freely with market forces determining rates. It is, however, very unclear as to where would the currency be traded.

Speculation primarily points towards an official exchange but within the financial world, the determined always manage to find a way (unofficial grey and black markets).

The reasoning behind the launch of the sovereign cryptocurrency is to stimulate the online economy without any dependency on foreign money markets and inflows. This would basically prevent any third party transaction broker to be a part of the process and on the other hand gives the government a free hand in its regulation and tracking.

Nikolay Nikiforov has apparently gone on record stating that Russia should have taken this direction long ago citing the competition from neighbouring European countries in the space.

The CryptoRuble, when put up for exchange, would require some kind of proof validating its origin. This can be done using a documented retail or service rendered transaction. This verification step is being incorporated to prevent money laundering as well as currency manipulation.

The government, however, has taken a smart decision by allowing the popular activities to flourish which might lead to undocumented CryptoRubles being introduced into the system by allowing it's exchange at an additional thirteen percent tax being charged over it. This tax will also be applied to any appreciation in value, although it’s unclear how or if the coin will be tied to the fiat currency.